As a product manager, do you take the time to isolate those value-add (VA) and non-value-add (NVA) service features that may or many not be needed by your customers? Are you a manufacturer of custom-made parts who needs to weed out those processes that do nothing other than add unnecessary time and increase costs? More importantly, when trying to nail down those product and service features customers are willing to pay for, versus those they aren’t, do you take the time to isolate your value-add versus non-value-add business processes? If not, then this might be worth a look. We’ll explain the importance of isolating VA and NVA process steps within your product and service offering.
Manufacturing Cycle Times Versus VA and NVA Processes
Granted, those aforementioned questions are quite involved. However, this entire approach simply allows product managers to identify those steps that are essential to keeping their customers coming back for more. In essence, VA & NVA is somewhat similar to reducing cycle times in manufacturing, where the impetus is on increasing production throughput by decreasing cycle times and increasing productivity rates. When reducing manufacturing cycle times, your company likely uses employee production stage prototyping to eliminate down time.
In the case of value-add vs. non-value-add process steps, the focus is on reducing those processes that waste time and increase service costs on finished goods. One approach shortens the time it takes to make a finished product and the other shortens the time it takes to get that product to your customers – without sacrificing your service capabilities. Eliminate those non-value-added service steps and you shorten your lead times to your customers.
Isn’t this similar to defining a company’s inventory replenishment time? Yes, but it’s important to note that your value-add & non-value-add analysis will shorten the time it takes to get your product to your customer. Your customer must then modify their own processes to reduce their own inventory replenishment times.
Identifying Value-Added Processes
“There’s no way I’ll buy that unless you include…..”
Value-added processes are those processes that must be completed in order to satisfy your customer base. They are process steps that either distinguish your product offering, or meet the minimum market entry requirements for new product introductions. However, what your company must be able to do is to isolate or segregate those customer specific requests, versus those market specific requests. In essence, you can’t change processes simply to satisfy one client if that ultimately means you’ve isolated the entire market.
The problem companies face is that they lack the mechanism to track VA data points. They get one customer complaint and react immediately. In essence, they are unable to quantify that single complaint in terms of its overall cost to their product line, and the impact of that possible change to their product’s lead time. The ability to distinguish between one customer complaining, versus many, requires the ability to focus on voice of customer (VOC) data collection techniques. Master those techniques and you'll be able to distinguish between real issues and fabricated ones. When looking to identify value-added process steps on your product, it's important to focus on the following:
Identifying Non-Value-Add Processes
“We know what’s best for our customers – even if they don’t know it themselves!”
The most important part of this entire exercise is to isolate those non-value-added process steps that cost your company sales. What are these NVA processes? In order to answer this question, think of how some companies decide what their customers want or need based on assumptions, and not factual assertions. They take the mindset that they know what their customers want, rather than listen to what their customers are asking for. If you’re wondering how this happens, think no further than when engineering takes charge of a given project and starts adding all kinds of “bells & whistles” to the final custom-made product.
In most cases, they aren’t needed, weren’t asked for and won’t lead to any increase in customer satisfaction. These are processes and additions that not only cost money, but that weren’t in the product’s original scope. Unfortunately, the time it takes to implement these processes actually upsets the customer – instead of pleasing them.
In some extreme cases, companies may take their analysis of their value-add vs. non-value-add process steps to an extreme by using time tracking. They’ll often break down their processes and track the cycle times needed to complete those processes. It can get quite involved, when in reality, it doesn't need to be. However, as extreme as this sounds, it’s definitely not something your company needs to employ if your market and customer base are on a smaller scale.
Most of this is common sense. Unfortunately, rarely is common sense employed by businesses today. A number of product managers base their decisions on assumptions, assumptions that have no basis in fact and no evidence to support the claim. Regardless, they proceed with a course of action that not only wastes time, and costs the company money, but ultimately leads to an upset customer.
To learn about how to perform a value chain analysis, please see: Defining Value Assertion and Value Proposition in Business Development
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